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Everything You Need to Know About EPF

 

What is EPF?

EPF stands for Employee Provident Fund. It is a collection of funds that both the employer and the employee contribute on a monthly basis. It is a scheme that provides financial support to all salaried individuals post-retirement.

EPF is the main scheme under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Employees Provident Fund Organization (EPFO) backs this scheme. It is mandatory for an organization that has more than 20 employees to register under the EPF Act.

In an EPF 2021 Scheme, an employee has to pay a certain amount from his salary towards the scheme. However, the employer pays an equal amount as well. This amount is contributed on a monthly basis further helps in providing monetary benefit to the employee after his retirement from her.

EPF is basically a retirement benefit plan and aims to ensure a financially independent retirement.

 

Benefits of EPF

EPF comes with an array of benefits to the employees. A meager contribution from both the employee and the employer helps the employee achieve financial stability post-retirement. It inculcates a feeling of future security in them.

It is a kind of investment planning by both the employee and the employer.

The following are the benefits of the Employee Provident Fund: -

·         Corpus for Retirement: A minimum contribution of an employee towards the EPF scheme is 12%. Hence every employee earning over Rs. 5000 or more every month is required to pay 12% of his / her salary towards the EPF Scheme. This contribution helps in the long term to build a corpus. This corpus would help establish financial stability and security post-retirement. This will further help an employee lead a stress-free life after his retirement.

·         Emergency Corpus: The EPF contribution rate scheme helps overcome emergencies like medical or financial or any other unforeseen emergency. This will help him / her use the corpus in any such uncertainties arising in life.

·         Premature Withdrawal: EPF comes with easy and hassle-free premature withdrawals. Employees can also partially withdrawal in cases of emergencies. The scheme allows employees to withdraw the fund before its maturity during emergencies.

·         Tax Saver: Under the EPF rate Scheme, any interest earned is fully exempted from tax. EPF offers tax-free returns. Hence, any withdrawals made after the maturity of the fund are non-taxable. Any contribution made by the employee towards the EPF Fund is tax-deductible under section 80 C of the Income Tax Act.

What is an EPF Calculator?

EPF calculator is an online tool that helps in estimating the EPF corpus on retirement. All you need to provide is basic details like retirement age, basic monthly salary, annual expected salary increase and contribution to EPF.

With the estimated value on retirement, you plan your retirement. You can estimate whether or not the corpus created meets your financial need on retirement. Accordingly, whether you need to invest more in other investment alternatives to meet the financial needs.



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